Who is the man touted to take over Petrobras?

Bnamericas Published: Friday, December 23, 2022
Who is the man touted to take over Petrobras?

The expected appointment of senator Jean Paul Prates (pictured) as the next president of Petrobras is generally seen as positive by most local analysts. 

If Prates is confirmed as leader of the state-run oil company in 2023 by Brazil’s president-elect Luiz Inácio Lula da Silva, he will likely make changes to its current strategic orientation. 

A lawyer and economist, Prates is a member of Lula’s Workers Party (PT) in Rio Grande do Norte state. 

He took part in the legal advisory of Petrobras International Braspetro at the end of the 1980s and founded Brazil's first consultancy specialized in the oil industry in 1991. 

In 1997, he participated in drafting the federal petroleum law, which ended Petrobras' monopoly in the exploration and production segment. He also drafted the official Brazilian concession contract and the royalties decree. 

As energy secretary in Rio Grande do Norte, Prates led the state to energy self-sufficiency, securing more than 10bn reais (US$1.9bn) in investments.

He also managed the expansion of the Clara Camarão refinery, then belonging to Petrobras, paved the way for the start-up of the Termoaçu and Bioformosa thermoelectric plants and initiated planning for solar energy investments in the state.

"Jean Paul Prates has experience in the area and, at its head, has the ability to lead Petrobras toward more professional management, with a better understanding than [Aloízio] Mercadante or Dilma [Rousseff], names that have been speculated to take over," Flávio Conde, analyst at Levante Ideias de Investimentos, told BNamericas.  

But there are some issues that concern Conde, such as the future of Petrobras' fuel pricing policy, since Lula is a critic of import parity, calling for formulation of prices that factor in domestic production costs and freight. 

The analyst believes that other sensitive points include the possible increase of investments in refineries and renewable energy, reducing dividends to around 25% of the company's net profits, instead of 90% at present. 

"That’s negative for investors," said Conde. 

He added, "investing in refineries has caused problems in the past and there’s a risk of that happening again. As for renewable energy, it’s very important, but you have to evaluate the return on projects." 

Mahatma Ramos dos Santos, a researcher at local petroleum studies institute Ineep, said that the possible appointment of Prates could mean a change in strategy for the company, since he has always had a critical view of the company’s current management. 

"The senator also has a long trajectory of technical and legislative activism in the energy sector, which makes him a respected expert on the subject," he told BNamericas.  

Regardless of whoever is chosen to head Petrobras, Ineep expects the new management to carry out a strategic review of the company's guidelines to reposition it as an integrated and diversified company, Santos added.  


During 2022, Prates has presented several proposals related to the energy sector in the national congress, while criticizing the current administration of Petrobras. 

In February 2022, he proposed the creation of the price stabilization account (CEP), which would be managed by the federal government and use revenues from tax on oil exports.

"The CEP will be able to use revenue sources derived from the extraordinary rise in the international oil and fuel prices in Brazil when pegged to the import price parity. The distribution conflict would therefore be reduced, since the account is supplied by extraordinary funds from so-called windfall profits, exceptional profits that Brazil earns," the senator claimed. 

In March, he summoned then-president of Petrobras Joaquim Silva e Luna to explain the distribution of more than 100bn reais by Petrobras to its shareholders amid rising fuel prices: 

"It's really important for the president of Petrobras to comes and explain to us the logic of distributing more than 90% of Petrobras profits to shareholders to the detriment of reinvestments, and also explain the company's rate of return, which is much higher than its counterparts at this time," he said.  

That same month, Prates proposed the merger of Petrobras and Eletrobras to form a single energy company to promote sustainable energy technology through the use of hydrocarbons. 

Prates said that the new company would be a backbone of energy activity, in synergy and partnership with the private sector. 

In May, Prates condemned the sale of Petrobras' Isaac Sabbá refinery (Reman) to the private sector. 

He described the deal with Atem Distribuidora as "concerning", as it would transform the refinery into a "regional private monopoly."


Prates is also the author of a bill (576/2021) that regulates research and development of energy generation from offshore sources. 

He is also responsible for bill 1.425/2022, which regulates the permanent storage of carbon dioxide.

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